Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2023 Earnings Call Transcript

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Q4 2023 Earnings Call Transcript February 7, 2024

Vanda Pharmaceuticals Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 Vanda Pharmaceuticals Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would like now to turn the call over to Kevin Moran, Vanda’s Chief Financial Officer. Mr. Moran, you may begin your conference.

Kevin Moran: Thank you, Jeannie. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals’ fourth quarter and full year 2023 performance. Our fourth quarter and full year 2023 results were released this afternoon and are available on the SEC’s EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today’s call is Dr. Mihael Polymeropoulos, our President, Chief Executive Officer and Chairman of the Board; and Tim Williams, our General Counsel. Following my introductory remarks, Mihael will update you on our ongoing activities. I will then comment on our financial results before opening the lines for your questions.

Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of Federal Securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances, and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our most recent annual report on Form 10-K as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings with the SEC, which are available on the SEC’s EDGAR system and on our website.

We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events, or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Dr. Mihael Polymeropoulos.

Mihael Polymeropoulos: Thank you very much, Kevin and good afternoon everyone. Thank you for joining us to discuss Vanda’s fourth quarter and full year 2023 results. I will briefly discuss key updates and then I will ask our General Counsel, Tim Williams, to provide a brief update on litigation measures, before turning the call over to Kevin Moran to discuss our financial results. We have significantly advanced our development pipeline now with three PDUFA action dates in 2024, including our supplemental new drug application or sNDA for bipolar I disorder in adults with a PDUFA date in April of 2024 and our New Drug Application, or NDA, for gastroparesis with a PDUFA date in September 2024. On our supplemental NDA for HETLIOZ in the treatment of insomnia, as we previously communicated this week, our sNDA was accepted for filing and is under review by the FDA with a PDUFA target action date of March 4, 2024.

See also 15 Highest Quality Essential Oil Brands in the World and 50 Richest Countries in the World by GDP Per Capita in 2024.

Q&A Session

Earlier this week, we announced that we had received a notification from the FDA stating that the FDA has identified deficiencies that preclude discussion of labeling and post-marketing requirements and commitments at this time. No deficiencies were disclosed by the FDA in the notification, and the FDA stated that the notification does not reflect a final decision on the information on the review. However, frequently, such a communication from the FDA is followed by a complete response letter. Subsequent to that development on February 6, 2024, a Vanda filed suit in the US District Court for the District of Colombia, challenging the FDA’s conduct in reviewing the insomnia sNDA. Vanda is asking the District Court to compel the FDA to adhere to the legally mandated 180-day review period for sNDAs and to declare as unlawful and void the regulations the FDA relies upon to issue complete response letters.

On Fanapt, for bipolar I disorder, as previously discussed in December of 2022, we announced positive results in our Phase III clinical study of Fanapt in acute manic and mixed episodes with bipolar I disorder in adults. Our supplemental NDA for Fanapt in bipolar I disorder in adults has been accepted for filing by the FDA, and the target action date has been set is April 2, 2024. We believe that this potential label expansion represents a significant opportunity for the Fanapt franchise given the high prevalence of bipolar disorder in the United States. The estimated prevalence of bipolar disorder in the US adult population is multiple times larger than the estimated prevalence of schizophrenia. Additionally, on tradipitant for patients with gastroparesis, our new drug application has also been accepted for filing by the FDA, and the target action date has been set as September 18, 2024.

The FDA package supported by the results from clinic electrical studies 2301 and 3301, which we believe demonstrate substantial evidence of efficacy after tradipitant in this indication as well as a safety database to support the tolerability of this drug. The expanded access program continues with multiple patients have been treated for at least six months and the longest-treated patient for more than three years. We’re pleased with our revenue performance despite the challenges of the at-risk launches of generic catalyst products. Over the course of this year, we have taken a number of actions intended to position the commercial business for continued success, both with respect to existing products and indications as well as potential future products and indications.

These include preparations for the potential near-term expansion of the Fanapt franchise, if we receive FDA approval for bipolar I disorder accounts. During the fourth quarter of 2023, we completed a transformative acquisition as we obtained the US and Canadian rights to PONVORY, ponesimod from Actelion Pharmaceuticals Limited, a Johnson & Johnson Company for US$100 million. PONVORY is a once-a-day oral selective sphingosine-1- phosphate receptor 1 modulator, approved by the FDA and Health Canada to treat adults with relapsing forms of multiple sclerosis. Additionally, PONVORY is a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders ranging from psoriasis to ulcerative colitis. Most recently, the US Patent and d Trademark Office issued a notes of allowance for PONVORY patent application 17/962, 968, which when issued, is anticipated to expire on October 10, 2042.

On the clinical side, as previously reported, in May of last year, we announced positive results from the first Phase III study of tradipitant in the treatment of motion sickness. And subsequent to that, we initiated a second Phase III study, which is now already 50% enrolled. We plan to pursue FDA approval of tradipitant for motion sickness upon completion of the clinical development program. And outside of this update on the tradipitant motion sickness program we’ll continue to progress our robust clinical development pipeline, which includes multiple products across a wide range of therapeutic areas. With that, I will now ask Tim Williams, our General Counsel, to provide a brief update on litigation matters. Tim?

Tim Williams: Thank you, Mihael. I’ll provide a few litigation updates, starting with our HETLIOZ ANDA litigation. We filed a cert petition with the Supreme Court in January, asking the court to hear our case and clarify important aspects of patent obviousness law for the benefit of lower courts, including the Federal Circuit. The defendants, Teva and Apotex have waived their opportunity to respond to our petition. And today, the petition was distributed to chambers at the Supreme Court for consideration. We await their review. Next, I’ll provide an update of our case pending in the US Court of Federal Claims. In May of 2023, we sued the US Government for uncompensated taking of our trade secrets and confidential information.

This suit alleges a pattern of FDA reviewers improperly disclosing proprietary information to generic companies as part of the review of generic versions of Fanapt and HETLIOZ. The US Government moved to dismiss the case. After a January hearing on the matter, the court denied the government’s motion to dismiss, allowing us to proceed with fact discovery, which will include document production and depositions of FDA personnel involved in these matters. We’ve also had positive developments in our cases, challenging other agency actions of the FDA. In September of 2022, we sued to compel the FDA to adhere to the procedural and timing requirements of the Food Drug Cosmetic Act with respect to our jet lag sNDA for HETLIOZ. In January, the court ruled in our favor by finding that the FDA violated the Food Drug Cosmetic Act and ordering the FDA to take action on our hearing requests by March 5th, more than four months earlier than FDA had originally proposed to the court.

The court found the FDA’s conduct to be both unlawful and unreasonable. Specifically, the judge noted that the law requires hearings to commence within 300 days after an SNDA is submitted by a sponsor. Yet our SNDA for jet lag has been pending for over 2,000 days and it has been over 500 days since we requested a hearing. As I mentioned, the judge has demanded the FDA act and our hearing request by March 5, and we await FDA’s action by that date. Just yesterday, we filed an additional challenging FDA’s unlabeled conduct and reviewing our insomnia SNDA for HETLIOZ. As disclosed earlier this week, we received a notification from the FDA, stating that it had identified deficiencies that preclude discussion of labeling even though no deficiencies were identified.

This communication arrived more than 270 days after our submission which is well beyond the 180 days described by the statute. Further, by sending us this letter rather than taking the specific actions prescribed in the Food Drug Cosmetic Act. We believe the FDA is seeking to avoid final action that can be reviewed by a court of law. In our suit filed last night, we are asking the court to compel the FDA to adhere to the legally mandated 180-day review period and to declare as unlawful and void the regulations the FDA relies upon to avoid judicially reviewable final decisions. We continue to pursue additional litigation related to our HETLIOZ patents, generic competitors, interactions with regulators and various Freedom of Information Act disputes.

Details of all of our cases can be found in our disclosures and in publicly available court records. Back to you, Mihael.

Mihael Polymeropoulos: Thank you very much, Tim. I will now turn the call to Kevin Moran, our Chief Financial Officer, to discuss our financial results. Kevin?

Kevin Moran: Thank you, Mihael. And as Mihael mentioned, I’ll begin by highlighting the acquisition of the US and Canadian rights to PONVORY from Actelion Pharmaceuticals Ltd or Janssen, a Johnson & Johnson Company for $100 million that was completed in December of 2023 and where the transition is ongoing. PONVORY is a once-daily oral selective S1P1R modulator approved by the FDA in Health Canada to treat adults with relapsing forms of multiple sclerosis. During this transition period, Janssen will continue to operate the business pursuant to a customary transition agreement, while Vanda and Janssen transitioned regulatory and supply responsibility, for PONVORY to Vanda. This acquisition represents a significant milestone for Vanda expanding our commercial portfolio, diversifying our sources of revenue and providing Vanda the opportunity to develop a potential therapeutic candidate for the treatment of a diverse group of inflammatory and autoimmune disorders ranging from psoriasis to ulcerative colitis.